The Analytical Overview of the Main Currency Pairs on 2024.04.23

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0650
• Prev. Close: 1.0653
• % chg. over the last day: +0.02%

According to analysts, the policy divergence between the ECB and the Fed will harm the euro in the medium term: the ECB is expected to start cutting interest rates at the June meeting (86% probability), while the Fed is expected to postpone rate cuts. Moreover, economists expect 3 rate cuts from the European Bank and only 2 rate cuts from the US Fed. Investors are now awaiting PMI data from major European countries and a key US inflation indicator to get further signals on the monetary policy trajectory of major central banks.

Trading recommendations

• Support levels: 1.0632,1.0590
• Resistance levels: 1.0669,1.0686,1.0722,1.0795,1.0816,1.0843,1.0865

The trend on the EUR/USD currency pair on the hourly time frame is bearish. Yesterday, the price tested the liquidity below 1.0630, where buyers showed a reaction. The price is starting to form a flat accumulation with the boundaries of 1.0630–1.0670. Given that the price is in the middle of this flat, waiting for a reaction on one of the boundaries is important. For sell deals, consider 1.0670, but it is subject to the reaction of sellers. Price may update last week’s high of 1.0686 again to grab more liquidity. The 1.0630 level is good for buy deals, but also with confirmation.

Alternative scenario:

if the price breaks the resistance level of 1.0756 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2366
• Prev. Close: 1.2349
• % chg. over the last day: -0.14%

The British pound slid to $1.23, hitting its lowest since mid-November, as investors revised their expectations on the timing of the first rate cut by the Bank of England after dovish comments from Deputy Governor Dave Ramsden. Ramsden said that the risk of UK inflation remaining excessively high has diminished and could fall below the Bank of England’s latest forecasts. Markets now expect the first borrowing cost reduction at the August meeting. In contrast, it was previously expected to take place in September, with the possibility of an even earlier adjustment as early as June.

Trading recommendations

• Support levels: 1.2372,2312
• Resistance levels: 1.2341,1.2485,1.2520,1.2612,1.2634,1.2674,1.2707

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The support level of 1.2372 failed to hold the price, after which the price dropped to 1.2312. On the higher time frame, zone 1.2312–1.2372 is a demand area, so the price will probably trade here for some time. It is important for buyers not to let the price go below 1.2312. Otherwise, the British pound will face a strong sell-off. The divergence on the MACD indicator signals a technical correction. Under such market conditions, buyers can look for intraday trades with a target of 1.2372. Selling in the demand zone is not recommended.

Alternative scenario:

if the price breaks through the resistance level of 1.2467 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 154.55
• Prev. Close: 154.83
• % chg. over the last day: +0.18%

The Japanese yen hit a 34-year low at 154.7 per dollar, trading near the psychologically important level of 155, which markets fear could prompt government authorities to intervene in the currency markets. Speculation is growing that Japan may coordinate with the US and South Korea to support the yen after the US acknowledged serious concerns about the currency’s movement at a trilateral meeting last week. Investors are also awaiting the Bank of Japan’s policy decision this week, where it is predicted to maintain current monetary parameters.

Trading recommendations

• Support levels: 153.95,153.31,152.38,151.93,151.52,151.14,150.80,150.25
• Resistance levels: 154.75,155.00

From a technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price has again updated the historical maximum and is trading in the zone with a high probability of the Bank of Japan’s intervention. Pay attention to the compacted price growth up to 154.75 — all the liquidity void zones have already been filled. It is a sign of a sell-off to start, but there is room to fall. Technical indicators are overheated. It is not possible to buy here. Selling can be considered in the zone of 154.75–155.00.

Alternative scenario:

if the price breaks and consolidates below the support level of 152.58, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2388
• Prev. Close: 2325
• % chg. over the last day: -2.70%

Yesterday, precious metals prices were under pressure. Investors reduced investments in safe assets in favor of riskier ones after Tehran downplayed the significance of the retaliatory Israeli drone strike on Iran aimed at easing tensions. In addition, gold continued to be pressured by assertive statements from several Federal Reserve officials who said it was possible to maintain higher interest rates for an extended period to bring inflation under control. Higher interest rates reduce the attractiveness of non-interest-bearing assets such as gold.

Trading recommendations

• Support levels: 2292,2267,2249,2229,2206
• Resistance levels: 2314,2363,2400

From the point of view of technical analysis, the trend on the XAU/USD has changed to a downtrend. The support level 2363 failed to hold the price, after which, as expected, the sell-off started. The price broke through the priority change level and consolidated below the moving averages. The price did not react to the demand zone below 2319. Hence, this zone may become a supply zone if buying is there. The MACD indicator is oversold, but there is still room for further declines. Under these market conditions, sell trades are best considered from the zone above 2314, subject to sellers’ reactions. The price will likely test the liquidity below 2292. There are no optimal entry points for buying right now.

Alternative scenario:

If the price breaks and consolidates above the resistance level of 2400, the uptrend will likely resume.